Case Study – New York Times
New York Times is a prominent daily newspaper in the United States. The organization has started its operations in 1851 in New York City and expanded its services to other states in the country over a period of time. With the headquarters located in New York, the organization has circulation of 1.8 million. Recently, New York Times has been facing wide-variety of challenges which needs to be addressed with an immediate effect so that there would not be any major impact on the future growth prospects of the organization. Some of the major issues that New York Times facing are plummeting revenues, ...view middle of the document...
Moreover, the case study also indicated that the cash at the end of 2012 was $280 million, down from $400 at the end of 2011.
Business Transformation: As mentioned by Arthur Sulzberger, the news and information business has been undergoing huge transformation. Though the print business is very huge, the organization is no more in a situation to sustain in the market with the revenues generated from the print business. The news and information businesses are still in the process of recognizing where media consumption is moving and developing the strategies to capitalize on these changes in consumption.
Poor operating cash flow: New York Times has recorded poor operating cash flow in the financial year 2011. It is expected that the operational cash flows of the organization would be more disappointing in the financial year 2012. Due to the poor/negative operating cash flow, the organization is finding it very difficult to reinvent itself by financing innovative business opportunities.
Key Causes of the Problems at New York Times
In fact, there are several reasons for plummeting revenues of New York Times. The first reason is significant reduction in subscriptions of physical print sales. The second reason is the reduction of revenues generated by the organization through advertisements. In fact, the advertisement revenue of New York Times has fallen from $1,779 million in 2008 to $1,221 million in 2012. The decreasing advertising revenues are attributed to increasing competition from free newspapers, non-print sources of advertisement such as Craigslist and Online Classifieds. Another reason for decreasing revenues is that the organization is unable to capitalize the most sought-after sources such as online medium and mobile medium to enhance the revenues. Though the internet is reached every nook and corner in the United States, the revenues generated from online medium is not more than $100 million for New York Times.
The major reason behind rapid transformation in the news and information business is increasing digitalization and the changing consumer behaviours in accordance with the changing technologies. Yes, the number of people reading news articles, political analysis and news videos over internet is growing very rapidly. Though the senior managers of the New York Times is coming up with numerous of strategies and collaborations to distribute news to people across the globe over internet, they are unable to monetize the online business as expected. The inability of the organization to monetize the online business is considered as a major reason behind the stagnant revenues in past few years. This is the reason why, the digital subscribers from outside the United States still just 10% of the total digital subscriptions that the organization enjoys.
There are several reasons for poor or negative cash flow in New York Times. Poor online financial strategy is the first reason for poor cash flow. Whilst the budget that the...